Structure
Sell a higher‑strike put and buy a lower‑strike put in the same expiration. You receive a net credit; maximum loss is capped by the spread width minus credit.
What it is
A defined‑risk income strategy built with two puts.
Who it fits
Advisors seeking conservative, rules‑based income with capped downside.
- Mildly bullish outlook on the underlying
- Prefer defined risk vs. naked short puts
- Comfortable with options basics and suitability checks
Prerequisites
Operational and client‑fit requirements before using the strategy.
- Options approval for spreads at the broker
- Clear position sizing, risk caps, and liquidity rules
- Client understanding of assignment and max loss math